[X]
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Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
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For
the quarterly period ended June
30, 2006
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[
]
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Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of
1934
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For
the transition period
to __________
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Commission
File Number: 000-27621
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Florida
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95-4720231
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(State
or other jurisdiction of incorporation or
organization)
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(IRS
Employer Identification No.)
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1080
Beaver Hall Suite 1555 Montreal, Quebec, Canada H2Z
1S8
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(Address
of principal executive offices)
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514-313-6010
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(Issuer’s
telephone number)
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_______________________________________________________________
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(Former
name, former address and former fiscal year, if changed since last
report)
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Page
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||
PART
I - FINANCIAL INFORMATION
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||
PART
II - OTHER INFORMATION
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||
Our
unaudited condensed consolidated financial statements included
in this
Form 10-QSB are as follows:
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ASSETS
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||
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(IN
US$)
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|
Current
Assets:
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||
Cash
and cash equivalents
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$
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32,912
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Accounts
receivable, net
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325,796
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Investment
tax credit receivable
|
17,191
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Inventory
|
15,862
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Prepaid
expenses and other current assets
|
21,256
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Total
Current Assets
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413,017
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Fixed
assets, net of depreciation
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571,460
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TOTAL
ASSETS
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$
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984,477
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LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
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||
LIABILITIES
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||
Current
Liabilities:
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||
Loan
payable
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$
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86,926
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Loan
payable - related parties
|
594,417
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Convertible
debentures
|
90,961
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Derivative
liability
|
9,039
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Accounts
payable and accrued expenses
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268,376
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Total
Current Liabilities
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1,049,719
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Total
Liabilities
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1,049,719
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STOCKHOLDERS'
EQUITY (DEFICIT)
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||
Common
stock, $.001 Par Value; 50,000,000 shares authorized
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||
and
49,969,985 shares issued and outstanding
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49,970
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Additional
paid-in capital
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4,219,448
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Accumulated
deficit
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(4,918,305)
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Accumulated
other comprehensive income (loss)
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92,799
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Noncontrolling
interest
|
490,846
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Total
Stockholders' Equity (Deficit)
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(65,242)
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TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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$
|
984,477
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IN
US$
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|||||||||
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SIX
MONTHS ENDED
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|
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THREE
MONTHS ENDED
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||||||
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JUNE
30,
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JUNE
30,
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||||||
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2006
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2005
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2006
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2005
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OPERATING
REVENUES
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|||||||||||
Sales
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$
|
4,347,336
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$
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1,216,396
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$
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1,884,166
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$
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912,653
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|||
COST
OF SALES
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|||||||||||
Inventory,
beginning of period
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51,652
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44,059
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20,014
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121,236
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|||||||
Purchases
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3,759,996
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1,109,880
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1,466,103
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833,232
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|||||||
Inventory,
end of period
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(15,862)
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(102,490)
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(15,862)
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(102,490)
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||||
Total
Cost of Sales
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3,795,786
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1,051,449
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1,470,255
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851,978
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|||||||
GROSS
PROFIT
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551,550
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164,947
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413,911
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60,675
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|||||||
OPERATING
EXPENSES
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|||||||||||
Selling
and promotion
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56,220
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123,044
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29,232
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67,336
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|||||||
Professional
and consulting fees
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139,188
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584,664
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68,352
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388,050
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|||||||
Commissions
and wages
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441,569
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232,610
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185,985
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159,359
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|||||||
Other
general and administrative expenses
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72,091
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56,866
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34,562
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10,930
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|||||||
Depreciation,
amortization and impairment
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118,750
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99,083
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62,005
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49,082
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|||||||
Total
Operating Expenses
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827,818
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1,096,267
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380,136
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674,757
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|||||||
INCOME
(LOSS) BEFORE OTHER INCOME (EXPENSE)
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(276,268)
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(931,320)
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33,775
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(614,082)
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|||||
OTHER
INCOME (EXPENSE)
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|||||||||||
Interest
expense
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(16,627)
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(6,000)
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(12,361)
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(3,000)
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Total
Other Income (Expense)
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(16,627)
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(6,000)
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(12,361)
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(3,000)
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|||||||||||
NET
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
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|||||||||||
AND
NONCONTROLLING INTEREST
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(292,895)
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(937,320)
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21,414
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(617,082)
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|||||
Noncontrolling
interest
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47,820
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13,750
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19,993
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12,572
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|||||||
NET
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES
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(245,075)
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(923,570)
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41,407
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(604,510)
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|||||
Provision
for Income Taxes
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-
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-
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-
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-
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|||||||
NET
INCOME (LOSS) APPLICABLE TO COMMON SHARES
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$
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(245,075)
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$
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(923,570)
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$
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41,407
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$
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(604,510)
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NET
(EARNINGS (LOSS) PER BASIC AND DILUTED SHARES
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$
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(0.00)
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$
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(0.02)
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$
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0.00
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$
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(0.01)
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WEIGHTED
AVERAGE NUMBER OF COMMON
|
|||||||||||
SHARES
OUTSTANDING
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49,969,985
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46,132,692
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49,969,985
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47,055,150
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|||||||
COMPREHENSIVE
INCOME (LOSS)
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|||||||||||
Net
income (loss)
|
$
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(245,075)
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|
$
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(923,570)
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$
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41,407
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$
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(604,510)
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Other
comprehensive income (loss)
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|||||||||||
Currency
translation adjustments
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53,777
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44,677
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47,303
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(100,196)
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|||||||
Comprehensive
income (loss)
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$
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(191,298)
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$
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(878,893)
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$
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88,710
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$
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(704,706)
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IN
US$
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|||||
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2006
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2005
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CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||
Net
loss
|
$
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(245,075)
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$
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(923,570)
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Adjustments
to reconcile net loss to net cash
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|||||
used
in operating activities:
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|||||
Depreciation,
amortization and impairment
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118,750
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99,083
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Shares
issued for services
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-
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473,750
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|||
Changes
in assets and liabilities
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|||||
(Increase)
in accounts receivable
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(138,966)
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(29,519)
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(Increase)
in investment tax credit receivable
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(689)
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-
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(Increase)
in inventory
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35,790
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(58,431)
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|||
(Increase)
decrease in prepaid expenses and other current assets
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12,298
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4
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|||
Increase
(decrease) in accounts payable and
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|||||
and
accrued expenses
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(339,600)
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109,428
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||
Total
adjustments
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(312,417)
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594,315
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Net
cash (used in) operating activities
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(557,492)
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(329,255)
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CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||
Acquisitions
of fixed assets
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(50,110)
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(36,271)
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Net
cash (used in) investing activities
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(50,110)
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(36,271)
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CASH
FLOWS FROM FINANCING ACTIVITES
|
|||||
(Decrease)
in bank overdraft
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(16,905)
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-
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Proceeds
from loan payable
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9,225
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24,712
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|||
Proceeds
from loan payable - related parties
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594,417
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(42,702)
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|||
Proceeds
from convertible debentures
|
-
|
289,325
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Net
cash provided by financing activities
|
586,737
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271,335
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Effect
of foreign currency
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53,777
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44,677
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NET
INCREASE (DECREASE) IN
|
|||||
CASH
AND CASH EQUIVALENTS
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32,912
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(49,514)
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CASH
AND CASH EQUIVALENTS -
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|||||
BEGINNING
OF PERIOD
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-
|
84,254
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CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
$
|
32,912
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$
|
34,740
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CASH
PAID DURING THE PERIOD FOR:
|
|||||
Interest
expense
|
$
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6,000
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$
|
6,000
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2006
|
|
|
2005
|
|
|
|
|
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Net
loss
|
$
|
(245,075)
|
|
$
|
(923,570)
|
|
|
|
|
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|
Weighted-average
common shares
|
|
|
|
|
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Outstanding
(Basic)
|
|
49,969,985
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|
|
46,132,692
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|
|
|
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|
Weighted-average
common stock
|
|
|
|
|
|
Equivalents
|
|
|
|
|
|
Stock
options
|
|
-
|
|
|
-
|
Warrants
|
|
-
|
|
|
-
|
|
|
|
|
|
|
Weighted-average
common shares
|
|
|
|
|
|
Outstanding
(Diluted)
|
|
49,969,985
|
|
|
46,132,692
|
Estimated
Useful
|
|||||
|
Lives
(Years)
|
|
|||
Computer
equipment
|
5
|
$ | 1,063,283 | ||
Less:
accumulated depreciation
|
(491,823)
|
||||
Fixed
assets, net
|
$
|
571,460
|
|
|
2006
|
Net
operating losses
|
$
|
1,672,224
|
|
|
|
Valuation
allowance
|
|
(1,672,224)
|
|
|
|
$
|
|
-
|
|
2006
|
|
2005
|
Federal
statutory rate
|
(34.0)%
|
(34.0)%
|
|
State
income taxes, net of federal benefits
|
3.3
|
3.3
|
|
Valuation
allowance
|
30.7
|
30.7
|
|
0%
|
0%
|
|
|
Wholesale
|
|
Connection
|
|
|
|||||
|
Corporate
|
|
Services
|
|
Services
|
|
Total
|
||||
Sales
|
$ |
-
|
$ |
4,143,624
|
$ |
203,712
|
$ |
4,347,336
|
|||
Cost
of sales
|
-
|
3,601,033
|
194,753
|
3,795,786
|
|||||||
Gross
profit (loss)
|
-
|
542,591
|
8,959
|
551,550
|
|||||||
Operating
expenses
|
60,045
|
470,450
|
178,573
|
709,068
|
|||||||
Depreciation,
amortization and impairment
|
89,220
|
8,511
|
21,019
|
118,750
|
|||||||
Interest
(net)
|
(6,000)
|
|
(647)
|
|
(9,980)
|
|
(16,627)
|
||||
Net
income (loss)
|
(155,265)
|
|
62,983
|
(200,613)
|
|
(292,895)
|
|||||
Segment
assets
|
356,880
|
433,786
|
193,811
|
984,477
|
|||||||
Fixed
Assets, net of depreciation
|
356,880
|
87,043
|
127,537
|
571,460
|
Wholesale
|
Connection
|
||||||||||
Corporate
|
Services
|
Services
|
Total
|
||||||||
Sales
|
$ |
-
|
$ |
1,091,273
|
$ |
125,123
|
$ |
1,216,396
|
|||
Cost
of sales
|
-
|
1,016,740
|
34,709
|
1,051,449
|
|||||||
Gross
profit (loss)
|
-
|
74,533
|
90,414
|
164,947
|
|||||||
Operating
expenses
|
473,750
|
280,059
|
243,375
|
997,184
|
|||||||
Depreciation,
amortization and impairment
|
74,350
|
4,912
|
19,821
|
99,083
|
|||||||
Interest
(net)
|
(6,000)
|
|
(0)
|
|
(0)
|
|
(6,000)
|
||||
Net
income (loss)
|
(554,100)
|
|
(210,438)
|
|
(172,782)
|
|
(937,320)
|
||||
Segment
assets
|
520,450
|
108,430
|
251,847
|
880,727
|
|||||||
Fixed
Assets, net of depreciation
|
520,450
|
44,526
|
95,442
|
660,418
|
Exhibit
Number
|
Description
of Exhibit
|
10.1
|
Letter
of intent for Joint Venture Agreement between Teliphone,
Inc. and Intelco
Communication, inc. dated July 14, 2006 1
|
United
American Corporation
|
|
Date:
|
August
14, 2006
|
By: /s/
Simon Lamarche
Mr.
Simon Lamarche
Title: Chief
Executive Officer and
Director
|